Student Loans

[bigjoey38]

My son just lost his job and is unable to pay his student loans from Wells Fargo and sallie mae. I was the co-signer of these loans and of course I am starting to get the letters.

I am trying to avoid BK. With My own personal bills I have been working with a Credit counseling serivce for over a year now and have been doing fine. However with the additinal bills that will put me into a hardship ( additional 300 dollars I dont have).

Would they go after the owner first then the co-signer?

How does that work for BK for a co-signer?

Thanks

[bigjoey38]

Just noticed a few post below me.

Thanks

[chpxiii]

Student loans are not dismissable in a bankruptcy.

[bigjoey38]

Would they go after the owner first then the co-signer?

How does that work for BK for a co-signer?

[chpxiii]

If the lender cannot go after the original borrower, they will go after the co-signer. Since the person who co-signed agreed to be responsible for the loan should the original borrower default on the loan.

[cubfan300]

An Interesting Twist

Although not a student loan, I had a signature loan with my brother-in-law that was included in my bankruptcy as Special Unsecured to be paid 100% in an effort to keep his credit clean. The creditor did not post a claim and proceeded to writeoff the loan, damaging my brother-in-law's credit. Even with an offer to pay the loan, they refused and said that it was more advantageous to THEM to keep it as a write-off. So even when trying to do the right thing, sometimes these creditors mess you over.

[bigjoey38]

I know that the student loans are not dismissable in a bankruptcy, but can the payments be lowered and what if my son does a chapter 13, where does that put the co-signer for the loans?

[lrprn]

I know that the student loans are not dismissable in a bankruptcy, but can the payments be lowered and what if my son does a chapter 13, where does that put the co-signer for the loans?

Usually student loans are placed into deferment or forebearance during Ch 13 with interest continuing. Some districts do allow filers to include student loan payments in their Ch 13 plan (usually the loan needs to be paid off in full by the end of the plan). Your son needs to ask his lawyer what the practice is in their local court.

As far as lowering the payments - are the loans private or government-sponsored? If there are more than one loan and they are government-sponsored, then investigate if the loan(s) can be consolidated through the FFEL loan consolidation program http://www.ed.gov/offices/OSFAP/DCS/consolidation.html or the William D. Ford Direct Loan Program http://www.ed.gov/offices/OSFAP/DirectLoan/index.html . Also check to see if the loans can be rehabilitated through a loan rehabilitation program. Often these programs will reduce the payment owed each month.

You asked how his filing Ch 13 might affect you as the co-signer....remember it's your son that is filing - not you. It should not affect your credit at all, but it's a good idea to check your credit report periodically to ensure all is well. If you see any references to bankruptcy or IIB on your credit report, dispute that immediately in writing to get it changed.

One way or the other, the student loans must be paid in full. If your son ever defaults paying on them after his Ch 13 is over, then the lenders will come after you for full payment. Hopefully that won't happen.

[bigjoey38]

Thanks for the Info!

The student loans are through Wells Fargo Bank and Sallie Mae which should make it private right?